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George Acs  

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  • How Will Apple's Stock Split Impact Its Shareholders? [View article]
    Beta can be very mis-leading.

    As you point out timing and time frame can be very critical in the beta value. Your brokerage, Yahoo, Google and others likely will cite different beta values as they may use different time frames.

    In the case of Apple it has really been mis-leading of late in that if you watch Apple price with any regularity you will have seen that it very, very frequently moved in a direction opposite that of the broad market. Not participating in rallies and not following the S&P 500 lower on down days. The pure mathematics behind the definition of beta, however, doesn't really care about correlation or concordance. It just looks at the sums of the changes as compared to the standard's sum of changes over a defined period of time.

    T get a quick idea of the kind of volatility as stock may have around earnings just simply glance at price charts. You don't need to draw lines that are subjectively interpreted, you can simply see what the historical percentage changes have been, regardless of direction. The option market will give you some guidance by its "implied volatility," but there's nothing like seeing past performance.
    Apr 25, 2014. 10:20 PM | 3 Likes Like |Link to Comment
  • It's Raining Earnings, Hallelujah [View article]
    You are more brave and daring than I am. I can't pull the trigger to short stocks, especially in advance of earnings.

    When you say "short puts" are you referring to time frame or to having sold puts? From the context I couldn't readily tell

    If you were short a stock the appropriate hedge would be buying an out of the money call. If share price moved higher against you there is potential to leverage on the long calls and offset some of the adverse movement on the shares. Of course, that carries cost.

    However, if you were short puts, there is no leverage at work. If share price goes up your put premiums received won't bail you out beyond their premium.

    I was also confused about your HLF short puts. Are they at $60 and $65 strikes? Deep in the money? Those could be at risk of early assignment in advance of earnings
    Apr 25, 2014. 10:10 PM | Likes Like |Link to Comment
  • It's Raining Earnings, Hallelujah [View article]
    That's really the nice part about puts, especially when it's regarding a company that has some real products and services. It's a totally different story when you have a company that may be in some kind of death spiral as the world begins to catch on that not all is as appeared.

    I had to rollover LULU and Cree puts today, but that's something that I've happily done in the past, especially since I'm paying nothing to do so and collecting the premiums.
    Apr 25, 2014. 09:43 PM | Likes Like |Link to Comment
  • It's Raining Earnings, Hallelujah [View article]
    Brilliance and great luck are a fantastic combination.

    My wife long ago taught me, when it came to our kids, to take credit for every compliment that was directed toward them, because you know that people will quickly blame you for everything they did.

    So, in that case, great stock selection.
    Apr 25, 2014. 09:40 PM | 1 Like Like |Link to Comment
  • Cook Does Icahn's Dirty Work At Apple [View article]
    No. The shares are retired. As of February 2014 Apple had retired over 80 million shares (about $490 billion) since the recent buy back began. The SEC requires that such shares no longer have value, are not part of the float and do not represent any ownership in the company.

    In fact, in the event of continued rise in shares, there is actually detriment to society, because it represents further capital gains that never got gained and were never transferred into realized profits and never poured back into the economy.
    Apr 25, 2014. 09:38 PM | Likes Like |Link to Comment
  • Cook Does Icahn's Dirty Work At Apple [View article]
    I'm certain that there are some other things that we may elect to disagree upon. I do give you some credit for the ability to use Latin phraseology, but since you base your assessment on faulty diagnoses you may be practicing precisely that which you have accused of me.

    Remember, you are the one who based your arguments on words that didn't exist, yet you chose to assign them to me. Calling me pretentious doesn't do much to dissuade anyone from the fact that your arguments are based upon only your own imagination and projections.
    If that is not the basis for a fallacious argument under the pretense of credibility, perhaps you can explain to me from where your credibility emanates. Owning shares of a stock prior to a split isn't really that which distinguishes one from another.
    Apr 25, 2014. 09:29 PM | Likes Like |Link to Comment
  • How Will Apple's Stock Split Impact Its Shareholders? [View article]
    I have long liked MSFT as a stock because of its lack of price movement over much of the past decade, which suited me perfectly as a covered option writer. It functioned as an annuity for a decade.

    However, with regard to its splits, shares have virtually done nothing since the last split in 2003.

    Microsoft did something that companies don't often do in that they split shares repeatedly while they were still in the real growth phase of their company. There's little reason to believe that the price acceleration would have been any different without the splits.

    If you believe that Apple is still in the same kind of growth phase that it was 5-10 years ago then it would be a good purchase, with or without the split. My guess is that Apple is slowing down for a while, if not for good. There's nothing wrong with that, it's just the natural journey as companies begin to substitute the guarantee of dividends for the possibility of share growth
    Apr 25, 2014. 09:18 PM | 1 Like Like |Link to Comment
  • How Will Apple's Stock Split Impact Its Shareholders? [View article]

    I think that the only basis for the contentions made in this article must be that Apple is so uniquely different from everything else that has preceded it that it goes by its own rules and is not subject to the forces that control prices of mere mortal stocks.
    Unlike others, I only have about 35 years of stock watching experience, but the contentions defy the historical realities, although outliers can always occur. It's just not something that I would blindly stake much of value.
    Apr 25, 2014. 08:29 PM | 1 Like Like |Link to Comment
  • How Will Apple's Stock Split Impact Its Shareholders? [View article]
    Typically after the split date you trade a "when issued" version of the shares, so no one will be able to buy those full priced pre-split shares after the split and no one will get stuck with full priced shares that aren't eligible for the split.

    Otherwise, most everyone in the world would be trying to game the split and take advantage of some one who may be less aware.
    Apr 25, 2014. 08:17 PM | 5 Likes Like |Link to Comment
  • It's Raining Earnings, Hallelujah [View article]
    The key is finding a stock that offers an ROI that meets your goal and is below that lower boundary. That is mentioned right below the bullet points near the beginning of the article.

    That's the basis for balancing the risk and the reward.
    Apr 25, 2014. 08:14 PM | Likes Like |Link to Comment
  • It's Raining Earnings, Hallelujah [View article]
    The premiums listed are for the 5/2/14 options and are for the lower boundary defined by the implied volatility. I didn't list the premiums at the 1% level because they are pretty much what they are described to be. That is 1% of the strike level in that column. So, for example, the premium associated with the !% ROI for Yelp at the $45 strike would be at about $0.45 (or higher). It was, in fact, at Friday's closing at a $0.50 bid.
    The same process can be used for all of the stocks in the table in that the expectation should be that the premium will be 1% of the strike level identified in the "1% ROI Strike" column.
    Apr 25, 2014. 07:12 PM | Likes Like |Link to Comment
  • How Will Apple's Stock Split Impact Its Shareholders? [View article]
    I don't think that your contention that the sole reason for the split in shares was to "enhance the clientele for the stock," has much basis.

    To begin, Apple is not disproportionately owned by institutions prior to the split. It is owned at about the same level as both Coca Cola and IBM, representing another two very different price points from Apple. It is much more held by individuals than most of the stocks in the S&P 500.

    Additionally, there's no evidence that highly elevated share price is related to increased institutional ownership. There are relatively few stocks in the range of Apple, but among those, they are much more likely to be owned by individual investors than by institutions, when compared to the rest of the S&P 500 stocks. Historically, that included stocks like Google, MasterCard and Amazon, although Priceline and Chipotle are more widely owned by institutions.

    But to suggest that the Board of Directors would show such largesse is hard to accept, particularly since it took considerable arm twisting to get the Board to take any actions that would be considered to be share holder friendly for their existing share holders, much less to do any thing for potential share holders.

    Finally, while Apple may be in an entirely different universe of stocks, perhaps representing an aspirational kind of holding for some, the many years of history indicates that stock splits are all about the math. Any artificial enhancement of share price is usually after the announcement and not after the split and tends to be very transient. Anyone considering buying shares of a split stock, even Apple, on the basis of the split is most likely going to be disappointed, especially if your further contention, that of increased volatility was to become the case.

    It is funny to see on the one hand you dismiss the notion for increased post-split liquidity as being without empirical evidence, and then you suggest that "the stock split might result in lower liquidity."

    Might? Where is that empirical evidence? It's one thing to have a difference of opinion, but to dismiss something for its lack of empirical evidence and then offer more of the same is pure solipsism
    Apr 25, 2014. 06:53 PM | 7 Likes Like |Link to Comment
  • Cook Does Icahn's Dirty Work At Apple [View article]
    Ummm....that's really not the way it works. What Apple may have done was to have paid x number of dollars for shares and in turn that reduced the amount of dividends it must pay out on those shares and it may have indirectly offered some short term price support.

    It doesn't make any profit if shares appreciate, nor does it lose any when shares fall. The shares are removed from the public float and may, therefore, result in an EPS increase at future earnings reports., which in turn may lead to some mulyiple expamsion.
    Apr 25, 2014. 05:44 PM | Likes Like |Link to Comment
  • Cook Does Icahn's Dirty Work At Apple [View article]
    I refer you to your own comment which is the first to attempt to offer some substance to your opening opinion regrading your assessment of short-sighted commentary.
    The comment that describes the "analytical error" that I was purported to have made as "that Apple has no innovation and is pumping its stock through purely and exclusively through financial engineering."

    Those are fantasies of your imagination and not statements that I had made, noir inferred.
    And, it's still "Dr. Acs."
    Apr 25, 2014. 05:40 PM | Likes Like |Link to Comment
  • Cook Does Icahn's Dirty Work At Apple [View article]
    To be fair, Apple hasn't fared poorly by letting others test the waters.

    What they had shown is that no one is better able to take a product that is somehow missing in its ability to excite consumers and then turning it into something on a totally different level in terms of function, form and ease of use.

    I still have my Archos 15 GB .mp3 player that has pretty horrible from every aspect and though that new technology would go the way of mini-discs and others. But Apple can uniquely see the promise that certain product classes may hold and they can unlock that promise.

    So if they perceive interest in a watch, a TV, some health care related personal device or anything else, you can be certain that few will be able to get it done better than they. But when and what are really nagging questions that are taxing even some of the faithful
    Apr 25, 2014. 03:41 PM | 1 Like Like |Link to Comment